Samsung Reports Smartphone Earnings Decline In Three Years

This new year hasn’t started well for Samsung. Samsung Electronics, the world’s largest smartphone maker, until now reported its first drop in annual net profits since the past three years. This looks more grim when you consider the fact that Apple reported the largest corporate earnings in history.

Samsung reported a 27 percent decline in quarterly earnings for the period of October to December making it fifth consecutive quarterly decline. The tech giant said to gross a net profit of KRW 5.5 trillion (about $4.9 billion), compared to KRW 7.3 trillion made last year. This means Samsung suffers a dip of 23.2 percent in its net profit earnings for the past quarter. And overall Samsung said to make a profit of KRW 25 trillion for the year 2014, which dipped from KRW 36.8 trillion for the year of 2013.

Annual profit figures took a reverse gear while Samsung faced fierce competition for its throne by Apple. Also other home grown competitors like Huawei, Lenovo and Xiaomi have left no stone unturned to put a dent. Although Samsung did not announce figures for its mobile sales, Apple touted a record selling of 74.5 million iPhones in the previous quarter. Thanks to the launch of 4.7-inch iPhone 6 and 5.5-inch iPhone 6 Plus, Apple has gained a lot of new market share of the smartphone market in China. According to a report, Apple also gained significant grounds in Japan and South Korea as well. These markets were earlier dominated by Samsung due to demands of big screen smartphones.

While Samsung’s mobile sales reported a huge dip, by around 64 percent, its semiconductor i.e. chip manufacturing division made good progress. Relating to the high demands for the chips that Samsung sells to companies like Apple, the semiconductor sector recorded profits of KRW 2.7 trillion. These stats are the highest compared to the past four years. It helped Samsung to recover from its huge fall in the smartphone sector. A healthy demand for memory chips also helped Samsung.

Samsung trying hard to appease the shareholders during this storm, declared to pay a dividend of KRW 19,500 per common share. It is boosted up by 41 percent which was KRW 13,800 at the end of 2013 . Still Samsung shares fell by 0.36 percent amidst all this in morning trade at Seoul today.

Considering uncertainties of the market which is packed with cut throat competition and the ever changing user demands, Samsung has a lot of ground to cover. For now, all eyes reside on the launch of its Galaxy S flagship this spring.